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Thursday, December 20, 2012

IPS — Internal Audit Warns of IMF Politicisation by the U.S.

The International Monetary Fund (IMF)’s internal auditor has criticised the Fund’s recent policy on foreign currency reserves, and has offered an implicit warning that the United States’ outsized influence within the institution has resulted in policy that was insufficiently evidence-based.The findings, which were publicised in an unusually narrow report on Wednesday but follow months of discussion, are seen as a victory for a bloc of “middle income” developing countries, particularly China, that have advocated hoarding larger stockpiles of foreign currency as insurance against the effects of the international financial crisis.

2 comments:

These other nations need to be careful what they wish for. Given the lack of understanding of the monetary system by the US congress, the congress could require the central bank to begin accumulating the forex reserves of our trading partners or even begin storing excess government funds in a "sovereign wealth fund" that invests outside the US instead of treasuries. It could easily happen.

These other nations need to be careful what they wish for. Given the lack of understanding of the monetary system by the US congress, the congress could require the central bank to begin accumulating the forex reserves of our trading partners or even begin storing excess government funds in a "sovereign wealth fund" that invests outside the US instead of treasuries. It could easily happen.

When they think the US is borrowing from China and China has leverage over the US as its creditor, anything can happen.